Publisher wins tax case: Input services eligible for credit despite tax error. No evidence of willful evasion.

The tribunal ruled in favor of the appellant, a publisher, in a case where the appellant wrongly collected service tax on sponsorship services. The tribunal found that despite the appellant's error in paying the tax, the input services used for providing sponsorship services were eligible for credit. It was determined that there was no evidence of willful tax evasion by the appellant, leading to the tribunal setting aside the demand for the extended period and allowing the appeal with consequential relief.

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Issues:
1. Appellant wrongly collected service tax on sponsorship services.
2. Eligibility of input service credit for sponsorship services.
3. Allegation of suppression of facts by the appellant.
4. Application of extended period for demand.

Analysis:
1. The appellant, a publisher of newspapers and magazines, conducted competitive programs and received sponsorship for them, collecting service tax on sponsorship services. The department contended that the appellant wrongly paid the service tax on sponsorship services, which should have been paid by the service recipient. The issue was whether the input services used for providing sponsorship services were eligible for credit.

2. The appellant argued that despite mistakenly collecting service tax on sponsorship services, the input services like mandap keeper and quiz master services were used for conducting events and providing sponsorship services. They contended that denial of credit based on the appellant's incorrect discharge of service tax was unjustified. The appellant cited precedents to support their argument and emphasized that the department had not issued any show cause notice to the service recipients.

3. The department maintained that the appellant should not have paid service tax on sponsorship services, as it was the service recipient's liability. They alleged that the appellant manipulated facts to evade service tax payment and incorrectly availed CENVAT credit. The department invoked the extended period for demand based on these allegations.

4. After hearing both sides, the tribunal found that the demand was primarily based on the appellant's incorrect payment of service tax on sponsorship services. There was no evidence of willful intent to evade tax by the appellant. The tribunal referred to a similar case where credit was allowed despite a similar discrepancy. Consequently, the tribunal set aside the demand for the extended period, ruling in favor of the appellant and allowing the appeal with consequential relief.

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